Unemployment Compensation Tax

The Tax

	Collected by both the federal and state governments, Tennessee's portion is a credit against part of the federal taxes owed.
	Tax is paid by employers only. Cannot be deducted from employee's wages.
	The first $7,000 in wages paid to each employee is subject to this tax.
		Taxable wages include: tips, meals, lodging and other payments in kind.
		Non-taxable wages include: payments made by employer for insurance, retirement, or annuities.

Tax Rate

	State tax rate: 2.7% for most new employers to Tennessee.
	After 3 full calendar years, the employer is evaluated and a tax is assigned.
		Employer's history of taxes and employees laid off determines the tax.
		Minimum rate: 0%
		Maximum rate: 10%
	Unemployment compensation taxes are paid on a calendar year basis regardless of the employer's fiscal year.

Reporting

	New employers must file an initial report to determine their taxpaying status and receive their Tennessee account number.
	Wage reports and contribution reports must be filed quarterly.
	All employers reporting wages on 250 or more employees must provide information via magnetic media (tape or diskette).

For more information, please contact:
Employers Accounts
Operation Division
Davy Crockett Tower, 8th Floor
Tennessee Department of Employment Security
Phone: (615) 741-2346
Fax: (615) 741-7214